News on the Rice Shortage from Australia: “Rice is a staple food. Chardonnay is not.”

A headline article in today’s New York Times, A Drought in Australia, a Global Shortage of Rice, examined the intertwined problems of climate change and agriculture in some detail.

The Deniliquin mill, the largest rice mill in the Southern Hemisphere, once processed enough grain to meet the needs of 20 million people around the world. But six long years of drought have taken a toll, reducing Australia’s rice crop by 98 percent and leading to the mothballing of the mill last December.

That’s an astounding number; Australia is now producing only 2% of the rice it used to. So Australia is essentially no longer producing rise domestically, and must look to the world market for it’s import needs.

The collapse of Australia’s rice production is one of several factors contributing to a doubling of rice prices in the last three months — increases that have led the world’s largest exporters to restrict exports severely, spurred panicked hoarding in Hong Kong and the Philippines, and set off violent protests in countries including Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Italy, Ivory Coast, Mauritania, the Philippines, Thailand, Uzbekistan and Yemen.

The drought’s effect on rice has produced the greatest impact on the rest of the world, so far. It is one factor contributing to skyrocketing prices, and many scientists believe it is among the earliest signs that a warming planet is starting to affect food production.

This is not a surprising conclusion. Climate change is affecting not only temperature (why global warming is a misnomer), but also rain, storms, the growing season, and everything else to do with weather. In a heavily mono-cropped system of agriculture, like all industrial agriculture, the variety of crops grown are going to be optimized for high yields under pretty specific conditions of sunlight, temperature, and water. If those factors start changing, as they are now, there is a limited amount of variation that the mono-crop species can tolerate before the crops fail. That doesn’t even account for changes in weeds and pests with changing weather, or rising sea levels. If these conditions persist over a period of, say, several years, the amount of food we are going to be able to get from these crops that are far outside their comfort zone could plummet, and prices for the scarce supply will be high

Drought has already spurred significant changes in Australia’s agricultural heartland. Some farmers are abandoning rice, which requires large amounts of water, to plant less water-intensive crops like wheat or, especially here in southeastern Australia, wine grapes. Other rice farmers have sold fields or water rights, usually to grape growers.

Water-hungry rice paddies

This makes sense: in a country as dry as Australia, growing something as water-intensive as rice is probably not the greatest idea. It makes a lot more sense for Australia to grow something else, and then trade that something else for money with which to buy rice. This is a basic example of the Law of Comparative advantage. But then choice of what to grow instead of rice takes on a great deal of significance.

Wheat, as Saudi Arabia has seen, is not all that tolerant of desert climates, but certainly requires less water than rice. The classic choice of economists, as seen during numerous structural adjustment programs in Africa and elsewhere, is to focus on one main cash crop for export, using the foreign currency earned as proceeds to meet basic food needs by purchasing on the open market. This is Saudi Arabia’s route, only with oil instead of a cash crop.

The problem comes when prices for your cash crop collapse (as happened several times for coffee), or when prices for your staple imports rise faster than your ability to pay for them. Then prices go up sharply on the domestic market, leading to the food riots mentioned above. As the article says,

Scientists and economists worry that the reallocation of scarce water resources — away from rice and other grains and toward more lucrative crops and livestock — threatens poor countries that import rice as a dietary staple. The global agricultural crisis is threatening to become political, pitting the United States and other developed countries against the developing world over the need for affordable food versus the need for renewable energy. Many poorer nations worry that subsidies from rich countries to support biofuels, which turn food, like corn, into fuel, are pushing up the price of staples. The World Bank and the United Nations Educational, Scientific and Cultural Organization called on major agricultural nations to overhaul policies to avoid a social explosion from rising food prices.

In this case, the main problem is the rising price of staple grains and cooking oils. This problem is exacerbated in two way. One, increasing amounts of cropland are being used to grow biofuels instead of food crops. This isn’t necessarily the cause of the problem all by itself, but with the various government mandates for biofuel it means that there isn’t a strong prospect of easing the demand for grains by switching this land back to food production. Two, as climate change accelerates and crop yields go down or become even more unreliable, this strengthens the pressure on farmers to grow crops on marginal land in an attempt to secure a decent-sized crop. If heat and drought cut the yield of wheat in half, you’d have to grow wheat on twice as much land to try and get the same crop as before. This, in turn, requires more use of fertilizers and possibly water, hastens soil depletion, removes that land as a carbon sink, and increases erosion.

The news isn’t entirely bad, at least for a while:

Moderate warming could benefit crop and pasture yields in countries far from the Equator, like Canada and Russia. In fact, the net effect of moderate warming is likely to be higher total global food production in the next several decades.

But the scientists said the effect would be uneven, and enormous quantities of food would need to be shipped from areas farther from the Equator to feed the populations of often less-affluent countries closer to the Equator. The panel predicted that even greater warming, which might happen by late in this century if few or no limits are placed on greenhouse gas emissions, would hurt total food output and cripple crops in many countries.

In other words, you would need to count on the markets working really, really well to make sure that countries where climate change reduced local agriculture could still be fed. And then global food production would still decline overall. And I wouldn’t count on a rational distribution of food, considering the paltry $10 million in food aid to Haiti. And even that will buy far less grain than a year ago.

Part of the problem is that it remains much more profitable to grow other crops than staples grains. As the article describes,

Even with the recent doubling of rice prices, to around $1,000 a metric ton for the high grades produced by Australia, it is even more profitable to grow wine grapes. All told, wine grapes produce a pretax profit of close to $2,000 an acre while rice produces a pretax profit around $240 an acre.

Meanwhile, changes like the use of water to grow wine grapes instead of rice carry their own costs, as the developing world is discovering.

“Rice is a staple food,” said Graeme J. Haley, the general manager of the town of Deniliquin. “Chardonnay is not.”


7 responses to “News on the Rice Shortage from Australia: “Rice is a staple food. Chardonnay is not.”

  1. Pingback: Rice Biodiversity Techniques Remain Intact in Rural Thailand | RQDC

  2. Pingback: Green Judge » Blog Archive » Rice Biodiversity Techniques Remain Intact in Rural Thailand

  3. Pingback: » Rice Biodiversity Techniques Remain Intact in Rural Thailand

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  5. Pingback: Rice Biodiversity Techniques Remain Intact in Rural Thailand : Green Resouces

  6. Pingback: » Rice Biodiversity Techniques Remain Intact in Rural Thailand

  7. Pingback: Rice Biodiversity Techniques Remain Intact in Rural Thailand | Latros.Com

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